Interest Income (2025)

Taxable vs tax-exempt interest, reporting on Form 1099-INT, and strategies for HOH filers.

Taxable Interest

Interest from bank accounts, CDs, corporate bonds, and other investments is generally taxable and reported on Form 1099-INT.

Tax-Exempt Interest

Municipal bond interest is typically federal tax-exempt (but may be taxable at state level). Tax-exempt interest still affects MAGI for certain tax calculations.

Reporting & Planning

  • Report interest on Form 1040 (attach 1099-INT information)
  • Consider tax-exempt investments if in high tax bracket
  • Use tax-advantaged accounts for high-yield interest-bearing investments